F&C Asset Management will remain in Friends Provident's hands if the insurer cannot get the price it desires for it, Friends chief executive Trevor Matthews cautioned yesterday.

F&C Asset Management will remain in Friends Provident's hands if the insurer cannot get the price it desires for it, Friends chief executive Trevor Matthews cautioned yesterday.

The insurance com- pany is attempting to sell off units that do not fit with its new strategy of focusing on life and pensions products but there has been linger- ing concerns that market conditions make a sale difficult.

Fund manager F&C, which has a strong Edinburgh base from its roots in the Ivory & Sime business, is 52% owned by the insurer.

Matthews, who recently joined the company from Standard Life, said: "We don't have to sell them. We don't need the proceeds from the sale to support our strategy."

A particular problem for the insurer is that financing that enabled the private equity-backed buy outs of fund managers Gartmore and Jupiter in recent years is no longer available as banks struggle with funding.

A Friends spokesman told The Herald: "It is a difficult market to try to find a buyer for any business. Buyers getting the funding and the structure of that funding is another issue."

The two companies still insist that the original time-scale remains with a deal expected to be concluded by "the back end of the year".

An additional headwind for the companies is that F&C is struggling to retain assets, seeing a 7% drop in funds under management in the first six months of the year.

Part of the problem is that UK institutional investors are wary of giving the fund manager cash while its future remains in doubt.

But some there are also signs, outlined in research published by investment bank Morgan Stanley this week, that traditional investment approaches are out of favour with investors who are either opting for cheap passive investing, where the cash tracks a particular market, or going to specialists such as hedge funds.